We want to dial it down and wait and see how January develops. Right now, decide on the percentage you want to be invested and stay there until the market indicates you are on the right track and in the right names. Looking at a weekly MarketSmith Chart of the NASDAQ and the S&P500, we see that the last two Januaries were favorable, which I view as a contrarian indicator considering the market moves to fool the masses. Along with a strong December and overall year, it appears that we could be set up for a difficult January.  So the probabilities are against us having a good January.


Since we are interpreters and not predictors, we will let the market dictate our actions. Considering the six distribution days currently on the Nasdaq, (and the additional distribution day today) we must consider the potential for further weakness. Additionally, the market is due for a correction of more than 10%. Most corrections tend to start in January or April.At this point, we don’t know where we’re headed but we do know the various probabilities and we are adjusting accordingly.


Best returns,

Scott O’Neil


MarketSmith Incorporated

Follow Scott O'Neil at Twitter.com/WScottOneil